Brownfields to Brightfields (B2B) Financed by Leyline Renewable Capital
There are more than 450,000 brownfield sites in the United States according to the U.S. Environmental Protection Agency (EPA) covering 15 million acres. EPA defines a brownfield as a property that is compromised by the presence of a hazardous contaminant. These properties include former industrial sites, mines, and closed landfills whose past use limits future redevelopment options and which may pose ongoing health and safety hazards.
Putting utility-scale solar and other types of clean energy on brownfields is a good option for redevelopment and clean energy generation. Known as “brightfields”, this combination improves otherwise vacant sites. Revitalization means financial benefits may accrue to lower-income environmental justice communities that were once exposed to harmful operations. These brownfields sites may also have transmission and energy infrastructure close by, making grid interconnection able to send power to energy load centers. Finally, brightfields serve as a solution to rising tensions in states because of land use requirements, particularly for utility-scale solar projects spanning hundreds of acres.
What Categories of Brownfield Sites Qualify for Tax Credits?
The recent Inflation Reduction Act (IRA) allows for the allocation of 1.8 gigawatts for “environmental justice solar” credits in 2023. Projects receiving an allocation that are in a low-income community or on Indigenous lands would be eligible for a bonus investment tax credit of 10 percentage points, while projects that are part of a low-income residential building project or qualified low-income economic benefit project would be eligible for a 20-percentage point bonus investment credit.
There are several categories of brownfields that will not qualify for the ITC under the IRA. These include sites on the National Priorities List under the Superfund law, sites subject to an existing and current court order, a site which has a permit under the following EPA programs – the Safe Drinking Water Act, the Clean Water Act, the Resource Conservation and Recovery Program (RCRA), and the Toxic Substances Control Act (TSCA), and finally, a site being remediated under TSCA or RCRA.
However, the implications of installing solar panels on vacated brownfields are immense. The Rocky Mountain Institute estimates the amount of untapped solar potential by closed landfills represents roughly 63 gigawatts of energy capacity, equivalent to the electricity needs for the entire state of South Carolina.
Solar companies actively pursuing B2B projects on brownfields may find barriers to development ranging from navigating environmental risk to permitting and legal liability. Leyline Renewable Capital has partnered with John Gallagher, the Founding Partner and Managing Director of Aptus Management who can assist developers in assessing and managing the perceived risk of working on a brownfields site. Aptus Management and Leyline Renewable Capital have worked on several projects together including an anaerobic digester [or waste to energy] project in Linden, New Jersey. The 31-acre Linden site was home to an American Cyanamid chemical plant addressed under NJ’s Brownfield and Contaminated Site Remediation Act, which allowed it to be repurposed. John indicated, “brownfields sites, like our project in Linden, can be extraordinary locations for clean energy projects and a host of new tax incentives and liability protections afforded to B2B projects are making brownfields redevelopment even more attractive.”
Through this relationship, Leyline will help solar developers de-risk brightfield sites and our capital will finance development costs. Solar developers know the lengthy, time-consuming, and relatively expensive process of building projects, but brightfield projects require tapping into a firm’s specific experience of appropriate risk tolerance and proper mitigation strategy. Leyline wants to work with informed developers to tackle this underserved market segment. We will walk alongside you every step of the way for locally generated solar energy and support our economically transitioning communities.
We want to help de-risk and fund your B2B project. For more information, please contact us https://leylinecapital.com/home/contact